Mobile Payments Startup Boku Launches Billing Partnership With Sprint

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Fresh off a $35 million round of funding, mobile payments company Boku is announcing a direct carrier agreement with Sprint that will allow Sprint customers to charge online purchases to their Sprint wireless bill through a two-step authorization process. The agreement was made possible via a partnership with mobile payments operator BillToMobile.

As you may remember, Boku offers an online payments platform that allowed users to pay for online goods by charging the transaction to their mobile phone bill. When a user wants to purchase a virtual item, he can enter his cell phone number on a site, the site sends a text message to the phone, the user confirms the transaction with a short reply, and all the charges show up on his phone bill.

Direct carrier relationships are important because historically, mobile payments companies face the challenge of lofty carrier rates. Wireless carriers have charged roughly 30% to 40% to process transactions made via mobile phone accounts, making it very difficult for mobile payment companies like Boku to scale beyond virtual goods. These transaction costs are passed down to developers using Boku, which are then passed to the consumer. To avoid these costs, Boku has been negotiating direct relationships with carriers as a way of possibly avoiding these costs.

Boku President Ron Hirson tells us the rates in the U.S. are in the “teens.”

With the Sprint deal, Boku now has direct billing partnerships with all of the major carriers in the U.S., including AT&T, Verizon and T-Mobile.

Sprint customers will be able to make purchases online from Boku’s merchant network of Web-based gaming companies, social networks and service providers. Boku’s mobile payments system on Sprint includes partners such as Electronic Arts, Riot Games, Jagex, Stardoll, Kingisle and Gaia.

Boku is also announcing a number of key hires today. Jon Prideaux, EVP for Visa, and Stuart Neal, Managing Director of International Development for Barclaycard, are joining the company’s executive team as Chief Business Officer and Senior Vice President of Business Development, respectively. As we reported a few months ago, Boku recently launched a new NFC payments system with MasterCard.

Currently, Boku, which processes “hundreds of millions of dollars in mobile payments,” works in 66 countries and with 40 currencies, and has deals with more than 250 carriers covering some 3.2 billion consumers.